Company Analysis of Coca Cola Essay Example

day go with a soda beverages.. The Macro economic environment of coca cola “The Coca-Cola Company Limited is considered the world's largest beverage company and is the leading producer and marketer of soft drinks. Due to the high competition in the market, the

Company invested more than millions of dollars in the R& D, marketing and production, in order to design a new product to gain a higher margin. This short excerpt of the report focused on how Coca-Cola Company Limited uses strategies in order to compete in the mature market. This portion of the report focuses on the issues the Company currently faces. Background Coca-Cola Company Limited is the world largest offerer of non-alcoholic beverages and the most valuable firm in the world.

They owned over 300 brands in over 200 countries and serving carbonated soft drink and non-carbonated beverages such as fruit juice, fruit drink, sports drinks, offees and bottled water. Coca-Cola Co. is operating in their existing brands, and also develops new global and local brands and acquisition of the global or local brands. In 2002, the company has launched new brand product including Diet Lemon Coke, Vanilla Coke and large varieties of fruit taste Fanta including lime, grape, strawberry and passion fruit in Australia. The company has also acquired many new international water brands such as Danone Waters, Sparklettes, Alhambra and Evian... 2012, 08). Macro Economic Analysis of Coca Cola. StudyMode. com. Retrieved 08, 2012, from III The Microeconomics of Coca Cola

Customer’s taste and preference: If customers have a very strong preference for Coca-cola, their demand for it will remain unaffected even with a rise in the

price of Coca-cola.  Consumer’s expectations: If consumers expect a rise in price of Coca-cola in short run, they will demand more of it before the rise so that they can store it. Similarly, if consumers expect the price of Coca-cola to fall in short run they will demand less of it in present. ? Demographic population of the country: Demographic population of the country refers to the distribution of population in terms of age.

If the population of the country is more of middle-aged people, youth and kids then the demand for Coca-cola will increase and vice-versa. ? Time: Time is an important factor that affects the demand of Coca-cola. For example, the demand for Coca-cola will increase during festive seasons and summers. SUPPLY: Supply is the willingness and ability of producers to make a specific quantity of output available to consumers at a particular price over a given period of time. LAW OF SUPPLY: When there is a rise in price of the commodity, quantity supplied increases and whenthere is a fall in price, quantity supplied decreases.

So there is a direct relation between the price of thecommodity and the quantity supplied. E Elasticity of demand refers to rate of change in quantity demanded with a change in price of the commodity. Availability of substitute: Coca-cola has many substitutes which means if there is a change in price of coca-cola people shift to other aerated drinks, for example, Pepsi, Mirinda, etc. This means the elasticity of Coca-cola is high. ? Time: The demand for Coca-cola is always related to time factor.

This implies that elasticity of demand varies with the length

of time period. In case of long run the elasticity of demand is elastic (because the period is long enough for people to shift their taste and preferences) and in short run the demand remains inelastic? Income level: The demand for Coca-cola is elastic for middle income group people. The middle income group is sensitive to the change in price. Therefore, if there is an increase in the price of Coca-cola, the demand in the middle income group will decrease. ? Percentage of income spent on goods: Coca-cola is that product which is meant for the youngsters.

In the long run the demand is relatively elastic because even in the long run if there is an increase in the price of Coca-cola even the hard core Coca-cola drinkers will shift their preference because of the constraint in their pocket but in short run the demand remains inelastic. Elasticity of supply refers to the percentage change in quantity supplied of the commodity to percentage change in price of the commodity. Time factor: There are three supply periods based on time factor – the momentary period, the short period and the long period.

In the momentary period the supply is fixed, that is , elasticity of Coca-cola is zero. In the short run the company can increase its variable factors and increase the supply, which means the relatively elastic. In long run, all factors of production can be increased so supply becomes more elastic. ? Ability to store the product: The more convenient it is to store the product; the more elastic is the supply of the product. As Coca-cola can be stored for a

longer period of time, its elasticity is more.

Since Coca Cola exist in a duopoly type oligopoly market changes in current market trend can be managed between the market leaders as to ensure market success. With Coca Cola being the most widely sold and distributed carbonated drink throughout the world, sales and marketing trends of the product can be analyzed and operations can be reformatted to meet the current trends. Since 2008, Coca Cola has increased their worldwide unit case volume by five percent for the year which has led to continue growth in unit case volume for products sold around the world.

The increase of case volume sold has impacted global gains in volume and value share towards the overall growth that is in line with the firm’s long-term revenue and profit goals. With the current economic environment the trend with consumers consuming carbonated beverages has increased which has led to financial success of the company. ” “By 2012, it's estimated that an average 84. 5 liters of soft drinks will be consumed per person per year globally, with consumption rates in the global health and wellness drinks market rising rapidly. Bharat Book Bureau, 2007 )”4 To compete against Coca Cola and Pepsi Company in the duopoly market structure, any new company entering the market will have to excel in products that are healthier then soft drinks and reports overall wellness with consumer consumption. For Coca-Cola to maintain market share against new competitors entering the market the company must ensure products such as drinks like Vitamin water meets the requirement of consumer with taste and health to compete in a more heath

driven society”.

Conclusion

What is the industry structure? MLA The CSD (carbonated soft drink) industry is one that is very competitive. A few firms dominate this industry, most notably Coca Cola and Pepsi Cola. This is due to substantial barriers to entry. Cadbury- Schweppes, producer of products such as 7up and Dr. Pepper is the third leading company in this industry. Due to the dominance of Coca Cola and Pepsi, Cadbury-Schweppes faces the daunting task of having to fight for market share and survive in this fiercely competitive industry. Using economic analysis for support, Cadbury-Schweppes will need to use its strengths in the non-cola categories to compete in this CSD industry.

Introduction “Dr Pepper Company is the oldest major manufacturer of soft drink concentrates and syrups in the United States. Dr Pepper is the company's principal brand. Cadbury Schweppes PLC acquired Dr Pepper/Seven-Up Cos. Inc. in March 1995. The new business will be called the Dr Pepper Company, which will focus on the Dr Pepper brand by handling all beverage system sales, which account for 75 percent of its business, in addition to related independent bottlers. The second operating group will be Cadbury Beverages/Seven Up Co. , which will service independent bottlers not carrying Dr Pepper.

Dr Pepper/Seven Up soft drink brands now hold about 16 percent of the U. S. market. Dr Pepper and Seven- Up are among the top 10 carbonated soft drinks, with Dr Pepper being the top non-cola soft drink. Other soft drink include: A&W Root Beer, Canada Dry, Schweppes, Welch's, Sunkist, Squirt, Crush and Hires (Levy 1999). According to the soft drink industry report, there is

large sales growth recently in non- colas. Dr Pepper was number three in the industry. The reason is because non-colas have above-average caffeine level, and will be aimed at the 12-to 21-year-old market.

Obviously, management sees this product as an opportunity to more fully participate in the growing popularity of non-colas. order to understand the situation of Cadbury-Schweppes in the CSD industry, the product, which is soda, needs to be analyzed. This product follows the law of demand, which simply states that the higher the price the lesser the quantity demanded, and the lower the price the greater the quantity demanded. [pic] The Demand Curve The D stands for demand. The demand curve is negatively sloped. There are five different determinants of demand that shift the demand curve either to the right or to the left.